The iShares Core S&P Small-Cap ETF (IJR) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and IAU is a iShares N/A fund. So, what’s the difference between IJR and IAU? And which fund is better?
The expense ratio of IJR is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than IAU over the past ten years.
In this article, we’ll compare IJR vs. IAU. We’ll look at industry exposure and annual returns, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss IJR’s and IAU’s performance, fund composition, and risk metrics and examine how these affect their overall returns.
|Name||iShares Core S&P Small-Cap ETF||iShares Gold Trust|
The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
IJR’s dividend yield is 0.96% higher than that of IAU (0.96% vs. 0.0%). Also, IJR yielded on average 7.94% more per year over the past decade (13.97% vs. 6.03%). The expense ratio of IJR is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.
IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.
The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
IJR is 17.31% more exposed to the Industrials sector than IAU (17.31% vs 0.0%). IJR’s exposure to Financial Services and Technology stocks is 15.91% higher and 14.32% higher respectively (15.91% vs. 0.0% and 14.32% vs. 0.0%). In total, Communication Services, Energy, and Consumer Defensive also make up 10.60% more of the fund’s holdings compared to IAU (10.60% vs. 0.00%).
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
The iShares Core S&P Small-Cap ETF (IJR) has a Mean Return of 1.21 with a R-squared of 76.03 and a Standard Deviation of 18.68. Its Alpha is -3.7 while IJR’s Beta is 1.2. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Treynor Ratio of 10.77.
The iShares Gold Trust (IAU) has a Beta of 0.48 with a Treynor Ratio of 1.5 and a Alpha of 4.16. Its R-squared is 16.03 while IAU’s Sharpe Ratio is 0.13. Furthermore, the fund has a Standard Deviation of 16.97 and a Mean Return of 0.23.
IJR’s Mean Return is 0.98 points higher than that of IAU and its R-squared is 60.00 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than IAU. The Alpha and Beta of IJR are 7.86 points lower and 0.72 points higher than IAU’s Alpha and Beta.
BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).
IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% respectively.
The year 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.
With a $10,000 investment in IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
IJR’s CAGR is 7.94 percentage points higher than that of IAU and as a result, would have yielded $22,014 more on a $10,000 investment. Thus, IJR outperformed IAU by 7.94% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.